Governor Defies Moriarty Trustee on Vote Funds

Gov. George Deukmejian said Friday that he will ask the bankruptcy trustee for Orange County businessman W. Patrick Moriarty to justify a demand for return of $17,000 in allegedly laundered campaign contributions from Moriarty’s associates.

Deukmejian, speaking to reporters after delivering the commencement address at a private high school here, said he will ask bankruptcy attorney James Stang to prove that the money was illegally laundered and to demonstrate what law provides the basis for the trustee’s request that the money be returned.

“Our attorneys are going to be writing to the attorney for the trustee and asking that attorney to substantiate in terms of facts and in terms of legal basis the request that they made,” Deukmejian said. “It’s not only a case of whether it was laundered money, it’s also a case of whether or not the trustee has any legal basis to request those payments.”

Earlier this month, Stang sent letters to the governor and dozens of other politicians asking for the return of hundreds of thousands of dollars in campaign contributions allegedly laundered illegally through Moriarty’s associates. Stang claims that the funds are assets of Moriarty’s failed businesses.

Received Funds in 1982

Moriarty pleaded guilty in March to a variety of corruption charges, including making illegal contributions to elected officials in an attempt to influence their actions. He is now cooperating with investigators in the case.

In 1982, Deukmejian received $10,000 from former State Fire Marshal Albert Hole and $7,000 from insurance broker John E. (Pete) Murphy, both associates of Moriarty.

Deukmejian has repeatedly said that he has no evidence that the money actually came from Moriarty and that he has no intention of giving it back.

In Stang’s letter requesting payment of the money, Deukmejian said, “There was absolutely nothing to support the allegation, first of all, that it (the money) was from Mr. Moriarty, secondly, the allegation that it was a fraudulent conveyance and, thirdly, there was nothing in his letter to even support legally that there’s a legal basis to make such a request.”

Prestigious Prep School

Deukmejian, who has made funding for public schools one of his top priorities, delivered his first high school commencement address as governor at the Robert Louis Stevenson School, a prestigious preparatory school that charges tuition of $10,500 a year.

The governor said he agreed to give the speech because the school is the alma mater of his top aide, Steve Merksamer, who was student body president there 20 years ago.

“I came here primarily as a favor to my chief of staff, Mr. Steve Merksamer, who of course is a prominent graduate of this very fine school,” Deukmejian told reporters.

In his address, the governor told the 120 graduating students: “A quality education is one of the greatest opportunities we can provide. . . . We need to make sure that you and your peers have the opportunity to continue, in the college or the university of your choice, the superb education you have been receiving here.”